PayPal's Blunder with Apple Pay(▼)(▲)
September 30, 2014
Ian Kar, for Bank Innovation:
Apple and PayPal started talking early on in Apple’s development of Apple Pay, as Apple was setting up partnerships with the card issuing banks and card networks. Since PayPal’s a payments industry leader, it would have been shortsighted for Apple to not reach out to PayPal.
But while these talks were going on, PayPal went ahead and partnered with Samsung on the Galaxy S5 fingerprint scanner, a move that was reportedly forced onto PayPal by eBay CEO John Donahoe. PayPal’s now-former president David Marcus was purportedly categorically against the Samsung deal, knowing that it would jeopardize PayPal’s relationship with Apple. Donahoe won the day, however.
Apple was said to be absolutely furious that PayPal did the deal with Samsung, which led Apple to cut PayPal out of the Apple Pay process entirely. (One source said: “Apple kicked them out of the door.”) This dust up with Apple was a big reason that David Marcus ended up leaving PayPal for Facebook.
We'll find out just how big a mistake this was for PayPal when Apple Pay launches this month, but based on how much the banks are already pushing Apple Pay (the Chase app on my phone has had an Apple Pay advertisement on the main login screen since the day of the Apple event earlier this month), I think this could be a pretty huge loss. It's a shame that PayPal's president knew the right way to go and was overruled anyway.